WHAT DO SCHOOLTEACHERS AND SUMO

WRESTLERS HAVE IN COMMON?

They both cheat.

• The possibility of promotion or higher pay, provokes teachers to inflate their

student's test scores. Whether through writing the answers to Standarized
tests on the whiteboard, exceeding the allotted time, or secretly changing the
student's answers afterwards, teachers now have as much incentive to cheat as
their students.

• For example, in 1996 if a Chicago school's reading scores fell below a certain
level, the school would close and staff would be "dismissed or reassigned"
(Dubner). This impending threat provoked teachers to inflate their student's
reading scores to keep the school open therefore solidifying their jobs. Reading
scores from over 30,000 students, spanning three grades showed evidence of
teacher tampering. In one grade a student's scores would be low, the next year
significantly higher, and the final year lower again. The significant increase in test
score in the middle year insinuates that the teacher tampered with the test scores
because the child was performing at a surprisingly higher level of reading. This
alone is a good sign, perhaps the student just became better at reading, however
the drop back to the a lower score the following year insinuates that the
student's reading abilities were never truly that much better, as their would be an
upward trend in score instead of up then down. Further analysis of the
entire Chicago Public School System experiment suggested at least 5% of
teachers cheat (Levitt and Dubner).

• Sumo wrestlers on the other hand, purposely lose matches due to bribery and
blackmail. While a few elite wrestlers earn high wages for their matches, the
majority of the players earn low if minimum wages. They are much more
susceptible to offers of money or violent threats than the elite because they have
much more to lose. They need the money, and fear the pain of violent retaliation
much more than the elite who can pay others to defend them.

• For example, the comparison between predicted and actual fight results showed
a strong favoring towards wrestlers that were not predicted to win. In a
tournament between two wrestler's who had both won seven matches each, the
 predicted outcomes were much more closer to the actual results as both
wrestlers had less incentive to cheat. They were both in the same position, both
needed the last match to advance in the tournament. Their was no incentive for
losing. However, if a wrestler who had won seven matches and needed one more
to advance fought a wrestler already guaranteed a spot in the next round
regardless of the outcome of the current fight, the wrestler with the guaranteed
spot has incentive to throw the match. He will be in the next round no matter
what, so he's more susceptible to bribery by the fighter who needs the final
victory. In cases like this where the 7-7 Wreslter's Predicted Win Percentage
Against 9-5 Opponent was 47.2% where the Actual win Percentage was a
whopping 73.4% cheating was much easier to infer (Dubner). There was such a
tremendous difference between the predicted and actual results that economists
assumed cheating. In anonymous interviews with two sumo wrestlers, it was
admitted that threats by yakuza (Japanese mafia) and bribery was extremely
prevalent in the Sumo world.

• Whether in a classroom, or a wrestling match, most people have some incentive

to cheat. Whether changing answer bubbles to secure your job, or throwing
matches for financial stability and safety just about everyone has their price.
These two examples only support the economic principle that "Incentives are the
cornerstone of modern life (Dubner)".
What Do School Teachers And Sumo Wrestlers Have in
Common?
Imagine for a moment that you are the manager of a day-care center. You have a clearly stated
policy that children are supposed to be picked up by 4 p.m. But very often parents are late. The
result: at day’s end, you have some anxious children and at least one teacher who must wait
around for the parents to arrive. What to do?

A pair of economists who heard of this dilemma- it turned out to be a rather common one-
offered a solution: fine the tardy parents. Why, after all, should the day-care center take care of
these kids for free?

The economists decided to test their solution by conducting a study of ten day-care centers in
Haifa, Israel. The study lasted twenty weeks, but the fine was not introduced immediately. For
the first four weeks, the economists simply kept track of the number of parents who came late;
there were, on average, eight late pickups per week per-day care center. In the fifth week, the
fine was enacted. It was announced that any parent arriving more than ten minutes late would
pay $3 per child for each incident. The fee would be added to the parents’ monthly bill, which
was roughly $380.

After the fine was enacted, the number of late pickups promptly went… up. Before long there
were twenty late pickups per week, more than double the original average. The incentive had
plainly backfired.

Economics is, at root, the study of incentives: how people get what they want, or need,
especially when other want or need the same thing. Economics love incentives. They love to
dream them up and enact them, study them and tinker with them. The typical economist
believes the world has not yet invented a problem that he cannot fix if given a free hand to
design the proper incentive scheme. His solution may not always be pretty- it may involve
coercion or exorbitant penalties or the violation of civil liberties- but the original problem, rest
assured, will be fixed. An incentive is a bullet, a lever, a key: an often tiny object with astonishing
power to change a situation.

We all learn to respond to incentives, negative and positive, from the outset of life. If you toddle
over to the hot stove and touch it, you burn a finger. But if you bring home straight A’s from
school, you get a new bike. If you are spotted picking your nose in class, you get ridiculed. But if
you make the basketball team, you move up the social ladder. If you break curfew, you get
grounded. But if you ace your SATs, you get to go to a good college. If you flunk out of law
school, you have to go to work at your father’s insurance company. But if you perform so well
that a rival company comes calling, you become a vice president and no longer have to work for
the father. If you become so excited about your new vice president job that you drive home at
eighty mph, you get pulled over by the police and fined $100. But if you hit your sales
projections and collect a year-end bonus, you not only aren’t worried about the $100 ticket but
can also afford to but that Viking range you’ve always wanted- and on which your toddler can
now burn her own finger.

An incentive is simply a means of urging people to do more of a good thing and less of a bad
thing. But most incentives don’t come about organically. Someone-an economist or a politician
or a parent- has to invent them. Your three-year-old eats all her vegetables for a week? She wins
a trip to the toy store. A big steelmaker belches too much smoke into the air? The company is
fined for each metric ton of pullatants over the legal limit. Too many Americans aren’t paying
their share of income tax? It was the economist Milton Friedman who helped come up with a
solution to this one: automatic tax withholding from employees’ paychecks.

There are three basic flavors of incentive: economic, social, and moral. Very often a single
incentive scheme will include all three varieties. Think about the anti-smoking campaign of
recent years. The addition of a $3-per-pack “sin tax” is a strong economic incentive against
buying cigarettes. The banning of cigarettes in resturants and bars is a powerful social incentive.
And when the U.S. government asserts that terrorists raise money by selling black-market
cigarettes, that acts as a rather jarring moral incentive.

Some of the most compelling incentives yet invented have been put in place to deter crime.
Considering this fact, it might be worthwhile to take a familiar question- why is there so much
crime in modern society?

After all, every one of us regularly passes up opportunities to maim, steal, and defraud. The
chance of going to jail-thereby losing your job, your house, and your freedom, all of which are
essentially economic penalties- is certainly a strong incentive. But when it comes to crime,
people also respond to moral incentives ( they don’t want to be seen by others as doing
something wrong). For certain types of misbehaviors, social incentives are terribly powerful. In
an echo of Hester Prynne’s scarlet letter, many American cities now fight prostitution with a
“shaming” offensive, posting pictures of convicted johns (and prostitutes) on websites or on
local-acccess television. Which is a more horrifying deterrent: $500 fine for soliciting a prostitute
or the thought of your friends and family ogling you on www.hookersandjohns.com?

So through a complicated, haphazard, and constantly readjusted web of economics, social, and
moral incentives, modern society does its best to militate against crime. Some people would
argue that we don’t do a very good job. But taking the long view, that is clearly not true.
Consider the historical trend in homicide (not including wars), which is both the most reliably
measured, crime and the best barometer of a society’s overall crime rate. These statistics,
compiled by the criminologist Manuel Eisner, track the historical homicide levels in five
European Regions.

The steep decline of these numbers over the centuries suggests that, for one of the gravest
human concerns- getting murdered- the incentives that we collectively cook up are working
better and better.
So what was wrong with the incentive at the Israeli day-care centers?

You have probably already guessed that the $3 fine was simply too small. For that price, a
parent with one child could afford to be late every day and only pay an extra $60 each month-
just one-sixth of the base fee. As babystitting goes, that’s pretty cheap. What it the fine had
been set at $100 instead of $3? That would have likely put an end to the late pickups, though it
would have also engendered plenty of ill will. (Any incentive is inherently a trade-off; the trick is
to balance the extremes.)

But there was another problem with the day-care center fine. It substituted an economic
incentive (the $3 penalty) for a moral incentive (the guilt that parents were supposed to feel
when they came late). For just a few dollars each day, parents could buy off their guilt.
Furthermore, the small size of the fine sent a signal to the parents that late pickups werent’t
such a big problem. If the day-care center suffers only $3 worth of pain for each late pickup, why
bother to cut short your tennis game? Indeed, when the economists eliminated the $3 fine in
the seventeenth week of their study, the number of late-arriving parents didn’t change. Now
they could arrive late, pay no fine, and feel no guilt.

Such is the strange and powerful nature of incentives. A slight tweak can produce drastic and
often unforeseen results. Thomas Jefferson noted this while reflecting on the tiny incentive that
led to the Boston Tea Party and, in turn, the American Revolution: “So inscrutable is the
arrangement of causes and consequences in this world that a two-penny duty on tea, unjustly
imposed in a sequestered part of it, changes the condition of all its inhabitants.”

In the 1970s, researchers conducted a study that, like the Israeli day-care study, pitted a moral
incentive against an economic incentive. In this case, they wanted to learn about the motivation
behind blood donations. Their discovery: when people are given a small stipend for donating
blood rather than simply being praised for their altruism, they tend to donate less blood. The
stipend turned a noble act of charity into a painful way to make a few dollars, and it wasn’t
worth it.

What if the blood donors had been offered an incentive of $50, or $500, or $5,000? Surely the
number of donors would have changed dramatically.

But something else would have changed dramatically as well, for every incentive has its dark
side. If a pint of blood were suddenly worth $5,000, you can be sure that plenty of people would
take note. They might literally steal blood at knifepoint. They might pass off pig blood as their
own. They might circumvent donation limits by using fake IDs. Whatever the incentive, whatever
the situation, dishonest people will try to gain an advantage by whatever means necessary.

Or, as W.C. Fields once said: a thing worth having is a thing worth cheating for.

Who cheats?
Well, just about anyone, if the stakes are right. You might say to yourself, I don’t cheat,
regardless of the stakes. And then you might remember the time you cheated on, say, a board
game. Last week. Or the golf ball you nudged out of its bad lie. Or the time you really wanted a
bagel in the office break room but couldn’t come up with the dollar you were supposed to drop
in the coffee can. And then took the bagel anyway. And told yourself you’d pay double the next
time. And didn’t.

For every clever person who goes to the trouble of cheating an incentive scheme, there is an
army of people, clever and otherwise, who will inevitably spend even more time trying to beat it.
Cheating may or may not be human nature, but it is certainly a prominent feature in just about
every human endeavor. Cheating is a primordial economic act: getting more for less. So it isn’t
just the boldface names- inside-trading CEOs and pillpopping ballplayers and perk-abusing
politicians-who cheat. It is the waitress who pockets her tips instead of pooling them. It is the
Wal-Mart payroll manager who goes into the computer and shaves his employees’ hours to
make his own performance look better. It is the third grader who, worried about not making it
to the fourth grade, copies test answers from the kid sitting next to him.